1/4% Tax on all stock trades pushed in NY Times today

[tomdavis]

Quote from Robert A. Green:

We are looking to show how FTT contributes to:
volatility increasing, not decreasing with FTT 'sands in the wheel';
Spreads increasing between bid and ask, with worse prices for those who use the markets;
More flash crashes with traders not providing liquidity;
Disappointing FTT revenues with transactions moving to non-FTT markets;

Volume reduction shows us the FTT effect, but FTT advocates want sand in the wheels and less volume. They want no HFT volume.

Let's expand and refine the above list of what tell tale signs we can use to prove our point.

The main pro-FTT arguments have to be addressed one at a time:


1) The FTT would raise billions to solve social problems.

The French FTT was projected by the Finance Ministry to generate 1.1 billion euros per year in revenues, or about 90 million euros per month.

http://www.sifma.org/blastemails/global_weekly_update/gfma/gfma-weekly021012.html

Tax revenues can be measured and compared to the official projections.

Losses (jobs/GDP) can also be calculated and their effects subtracted from the FTT revenues.


2) The FTT would tax (punish) banks and financial institutions.

Since MM are exempt from the FTT, who will actually be paying this tax? Pensions? Ordinary man/woman on the street?

This can also be measured.


3) The FTT would decrease market volatility.

Again, this can also be measured.

-----------------------------------

When the data is in, each of these elements needs to be addressed.

If the FTT doesn't raise a lot of money, doesn't tax (punish) banks and doesn't decrease volatility, the pro-FTT argument has severely depleted its ammunition.

 

[justrading]

Quote from Robert A. Green:


Volume reduction shows us the FTT effect, but FTT advocates want sand in the wheels and less volume. They want no HFT volume.

Let's expand and refine the above list of what tell tale signs we can use to prove our point.

The FTT is based on transaction value, so for projected FTT revenues to be met, 2 things have to happen;

1) Prices of assets subject to FTT have to stay within projected levels, and
2) Volume of these assets traded has to similarly meet projected levels.

A sharp and sustained decline in either will lead to a revenue shortfall. Compliments to Mae West, too much of a good thing can be wonderful in this case, so a decline in volume below projected levels not compensated for by an increase in asset prices will leads to a revenue shortfall. Of course should that happen excuses will sprout by the dozen so it would not hurt us to understand the reality.

Tom - Do you happen to know the assumptions used, ie was there a % decline in volume projected, was a certain year used as the benchmark for calculations?

TraDaToR - The FTT on stocks is for companies headquartered in France with a Market cap of 1 billion Euros at a given date. Is there a convenient index that broadly tracks these companies? I am thinking like the Dow 30 or the CAC 40?

The CAC 40 is one of the indices I look at. It has been in a trading range since September last year (roughly) and the so called move up mentioned on CNBC is just a move from the bottom of the range towards the top, ie nothing terribly significant.

 

[tomdavis]

Quote from justrading:

Tom - Do you happen to know the assumptions used, ie was there a % decline in volume projected, was a certain year used as the benchmark for calculations?

I've seen numerous articles stating the annual 1.1 billion euros projection for FTT revenues, but none of them provided any details as to how the projection was derived.

http://www.sifma.org/blastemails/global_weekly_update/gfma/gfma-weekly021012.html

The link below provides the most detail of those I was able to find:

http://www.shearman.com/files/Publi...ction-Tax-a-Sign-of-Things-to-Come-032012.pdf

 

[justrading]

Quote from tomdavis:

I've seen numerous articles stating the annual 1.1 billion euros projection for FTT revenues, but none of them provided any details as to how the projection was derived.

http://www.sifma.org/blastemails/global_weekly_update/gfma/gfma-weekly021012.html

The link below provides the most detail of those I was able to find:

http://www.shearman.com/files/Publi...ction-Tax-a-Sign-of-Things-to-Come-032012.pdf

Thanks. It does not go into specifics either. If the detail was debated in parliament it would have been reported, at least in the French press. Somehow nothing seems to have found its way into the international media.

We'll just have to keep an eye out then.

 

[TraDaToR]

Quote from justrading:

TraDaToR - The FTT on stocks is for companies headquartered in France with a Market cap of 1 billion Euros at a given date. Is there a convenient index that broadly tracks these companies? I am thinking like the Dow 30 or the CAC 40?

[/B]

I think the SBF120 would be the closest.

 

[justrading]

Quote from TraDaToR:

I think the SBF120 would be the closest.

Thanks. I have a few thousand global indices in my Metastock EOD subscription, let me see if I can find it there. Will advise when I have checked.

 

[zdreg]

Quote from tomdavis:

The main pro-FTT arguments have to be addressed one at a time:


1) The FTT would raise billions to solve social problems.

The French FTT was projected by the Finance Ministry to generate 1.1 billion euros per year in revenues, or about 90 million euros per month.

http://www.sifma.org/blastemails/global_weekly_update/gfma/gfma-weekly021012.html

Tax revenues can be measured and compared to the official projections.

Losses (jobs/GDP) can also be calculated and their effects subtracted from the FTT revenues.


2) The FTT would tax (punish) banks and financial institutions.

Since MM are exempt from the FTT, who will actually be paying this tax? Pensions? Ordinary man/woman on the street?

This can also be measured.


3) The FTT would decrease market volatility.

Again, this can also be measured.

-----------------------------------

When the data is in, each of these elements needs to be addressed.

If the FTT doesn't raise a lot of money, doesn't tax (punish) banks and doesn't decrease volatility, the pro-FTT argument has severely depleted its ammunition.

it doesn't matter. the goal is to show you are doing something. once the nose of the camel is under the tent it will takes years/ decades if then to revoke it.

 

[tomdavis]

Quote from zdreg:

it doesn't matter. the goal is to show you are doing something. once the nose of the camel is under the tent it will takes years/ decades if then to revoke it.

France is a lost cause and may never revoke it. But if the French FTT fails on the main three points, it's a disincentive for other countries to implement it.

 

[zdreg]

Quote from tomdavis:

France is a lost cause and may never revoke it. But if the French FTT fails on the main three points, it's a disincentive for other countries to implement it.

no it is not.
"it doesn't matter. the goal is to show you are doing something."
other countries' politicians will spin it in their favor.
they can pass an ftt within the next couple of years without data proof from France.
be realistic.

 

[tomdavis]

Quote from zdreg:

no it is not.
"it doesn't matter. the goal is to show you are doing something."
other countries' politicians will spin it in their favor.
they can pass an ftt within the next couple of years without data proof from France.
be realistic.

Since you believe that the FTT is inevitable and there's nothing we can do about it, why do you waste your time posting on this forum?